Another year, another Dirty Dozen from the IRS. Yes, as usual, the IRS has released its “Dirty Dozen” list of tax scams. The list doesn’t change that much each year; typically the methods become more sophisticated, but the intent is much the same. So it goes with the 2014 list, where the IRS highlights the following schemes:

Topping the list is Identity Theft. Despite efforts by the IRS to reduce this, it’s still a major issue. Check out the IRS Identity Protection area of their website for ways in which you can protect yourself.

Pervasive Telephone Scams are next on the list. This is where callers pretend to be from the IRS in the hope of gaining information from their victims that will allow them steal money or identities. There has been a definite increase in this area, including more legitimate-sounding callers, threats of jail, follow-up calls from people claiming to be from the police, and so on. Even if you’re aware that you really owe taxes, it does no harm to call the IRS yourself (1-800-829-1040) so that you’re sure you are talking to a real IRS representative.

Most people are aware of Phishing scams, where you receive a bogus, but very real-looking, email that takes you to a fake website asking for information. Amazingly, many people still fall for these schemes. Always remember, the IRS will never initiate contact through electronic media, such as emails or text messages (or should that be “taxed messages”?).

Please, do not be fooled by Offers of “Free Money” or Inflated Refunds, such as fictitious rebates, benefits, or tax credits. Scammers typically pose as tax preparers and will charge their victims for falsified returns, and you could even end up being penalized – remember, you are responsible for your return, regardless of who prepared it.

Connected with the previous point is Return Preparer Fraud. Approximately 60% of taxpayers have their returns prepared by tax professionals and, since you are legally responsible for your return, you should make sure you choose a legitimate preparer that will sign the return they prepare and enter their IRS Preparer Tax Identification Number (PTIN).

Are you Hiding Income Offshore? This doesn’t have to be the rich tax evader who is intentionally trying to hide assets. If you have any assets abroad then you are legally required to disclose the information, including Report of Foreign Bank and Financial Accounts filings.

The Impersonation of Charitable Organizations scam crops up regularly on the list. This is perhaps one of the worst items, where, especially following a natural disaster, scammers use phone calls, emails, and false websites to solicit money from donators, or claiming to help the victims file casualty loss claims and get tax refunds. If you want to help disaster victims, be proactive, contact a recognized charity or disaster helpline, and don’t give out personal information.

While it is expected that you will claim everything you’re legitimately entitled to, do not claim False Income, Expenses or Exemptions. This can result in interest, penalties, or even prosecution.

The IRS Tax Code is ridiculously long and most people agree that it needs to be overhauled. However, nothing is hidden – the entire tax code is published for everybody to see, so there’s no excuse for making what the IRS refers to as Frivolous Arguments to try to evade or defeat your tax obligations. Do not try to do so and do not be fooled by people that promote such frivolous arguments.

It’s actually pretty simple, do not fall victim to people who encourage you to claim deductions or credits to which you are not entitled. This includes listening to people who encourage you to claim deductions or credits to which you are not entitled, such as Falsely Claiming Zero Wages or Using False Form 1099; two scams that can get you into a great deal of trouble. These complex schemes, which include filing false documents to justify bogus claims, are pretty easy to spot. If it seems too good to be true, it probably is.

While this scam won’t affect too many taxpayers, Abusive Tax Structures are a problem that the IRS is trying to tackle. These complex schemes often involve multiple offshore entities, credit cards, etc. Buying into any arrangement that promise to eliminate or substantially reduce your tax liability is probably a bad idea and could result in criminal prosecution.

Often connected with abusive tax structures, the IRS is seeing an increase in the Misuse of Trusts and related questionable transactions. While there are many legitimate uses for trusts, if they are used as a means of avoiding income tax liability and hiding assets you’re probably going to end up in trouble.

As always, these are just some of the schemes in use, so please take care when dealing with tax issues and/or giving out any personal information.

On December 17th & 18th, 20/20 Tax Resolution attended the Colorado NCPE 1040 conference sponsored by PASC (Public Accountants Society of Colorado) where nearly 200 CPAs were present. The conference provided a great opportunity for team members from 20/20 to connect with CPAs from Colorado and surrounding states.

How can 20/20 Tax Resolution Help CPAs?

The team at 20/20 is comprised of knowledgeable, reliable and experienced attorneys and Enrolled Agents that have been providing tax solutions for both individuals and businesses across the nation since 1998. Over the past 15 years, the company has negotiated more than 15,000 successful tax resolutions for clients and has worked to become a leader in the complicated tax resolution industry.

Because 20/20 Tax Resolution does not prepare tax returns, the company is able to focus on handling any IRS collection problem both efficiently and effectively. Brian Biffle, president and founder explains, “20/20 is committed to maintaining an ongoing relationship with CPAs both locally and nationwide. By attending these events, we are able to learn about CPA’s issues as it relates to tax resolution as well as to provide them with our own insights into the world of the IRS Collection Division.” These types of connections allow CPAs to focus on what they do best and refer clients with any tax debt issues to the tax experts at 20/20.

If you ever receive a phone call from a person that claims to be an IRS employee, don’t immediately engage in a conversation about your taxes. In particular, the IRS Acting Commissioner, Mr. Danny Werfel, has just warned American taxpayers about an ongoing telephone scam that has already affected people all over the country.

It sounds like a real phone call from the IRS. Your phone shows a caller ID of the Internal Revenue toll free line, and a person on the phone seems to have your personal information, sometimes even the last four digits of your Social Security Number. You might even hear on a background how other “IRS agents” are making similar phone calls. However, there is something unusual about it.

The “pretend-to-be IRS agent” insists that you make a payment towards your tax debt immediately; otherwise you will face very unpleasant consequences. Depending on your situation and status, you might be threatened with a revocation of your Driver License, taking into custody, or immediate deportation. Here is where you should start being suspicious. The IRS will usually send a taxpayer a huge amount of letters and notices before the situation becomes serious enough and can lead to a legal collection action by taxing authorities. However, even then it is not up to the IRS toll free line employee to decide whether or not you will be arrested or sent out of the country for not paying your taxes.

Another indication that the person calling you has nothing to do with the IRS is that this person is willing to accept your credit or debit card number right away, over the phone. You might also be asked to make a wire transfer. Mr. Werfel has clearly stated that the IRS “will not ask for credit card numbers over the phone, nor request a wire transfer”.

To make the scam calls more convincing, scammers often follow up with another call, this time from the Motor Vehicle Department or police. Of course, none of this is real. What can you do in this frustrating situation? First of all, do not answer any questions. Ask the person on a phone for his or her contact information (just in case it was a real IRS employee) and say that you need to do some research first. Even if you are sure that you don’t owe any taxes, it does not hurt to confirm this with the IRS. You can get an answer to this question by calling the IRS’ real office at 1-800-829-1040. If you do have a liability the IRS agent will inform you about that and will provide you with the contact information of the person (or an office) that has been assigned to your case.

If, as a result, you discovered that a phone call you received was a scam, you should report it to the Treasury Inspector General for Tax Administration. You can do it over the phone by calling 1-800-366-4484 or by visiting http://www.treasury.gov/tigta/ website. There is a Report Fraud, Waste and Abuse button in the upper left corner of the page that you need to click to proceed with your report.

If instead of a phone call you received an email from someone pretending to be an IRS employee, don’t open any attachments, don’t click on any links. Just forward this email to phishing@irs.gov.

Not that the Service stopped collections completely during the government shutdown that lasted for more than two weeks, but it definitely has not pulled the expected amount of back taxes. In addition, as of today, billions of dollars of refunds have to be paid to individuals and businesses in America. What does this mean to a regular taxpayer with unpaid taxes? Although it might take the IRS some time to completely resume operations, as soon as it catches up, there might be an increase in the enforced collection actions by Revenue Officers and Automated Collection System of the IRS.

In a statement dated October 17, 2013, the IRS asked taxpayers to be patient while its employees “are reporting back to work” and “assessing the impact of the 16 days shutdown”. In the attempt to restart its most important operations, the IRS is delaying some services, such renewals of PTINs (Preparer Tax Identification Numbers).

On the other hand, the Internal Revenue Service has already reminded all taxpayers that the government shutdown did not extend the deadline to file tax returns for those who asked for a six months extension back in April. According to the IRS, “the current lapse in federal appropriations does not affect the federal tax law”. This message makes it very clear that, although the IRS functions were affected by the shutdown, it does not mean that taxpayers will be able to use this as an excuse not to comply with tax obligations.

At 20/20 Tax Resolution, we continued to work on client cases during the government shutdown to comply with all deadlines despite the fact that the IRS was not operating. Although there was no way to communicate with federal taxing authorities, our employees did everything necessary to provide the best possible service to our clients. We prepared and sent a large number of Installment Agreement proposals and Offers in Compromise. “At this point, we know we received a large amount of correspondence during the closure”, said the IRS in its Operation Resumption Statement.

It is obvious that sorting out all this correspondence will take some time. However, the foreseeable result of the shutdown is an increase in aggressive collection activity by the IRS, which will mostly affect those taxpayers who were not proactive in resolving their tax debt.

The government shutdown that started on October 1, 2013 resulted in the closure of almost all IRS offices – no customer service representatives to phone, no walk-in taxpayer assistance, no Appeals Officers, not even Taxpayer Advocates are available.

However, somehow the IRS continues to process tax returns with payments, although it does not issue any tax refunds. Automated phone lines remain open and the IRS computer system continues generating automated notices to the taxpayers. In other words, if you received a letter from the IRS, there is nobody there to call to discuss it.

Despite the IRS closure, the tax law remains in effect, which means that individuals and businesses are required to file tax returns and pay taxes by the deadline. For instance, October 15, 2013 is still a due day to file 2012 1040 Income Tax Returns for those taxpayers who requested an Extension to File.

Filing tax returns electronically is the fastest way to get them processed, especially while the IRS is closed. Most electronically submitted returns will be processed automatically, even though no refunds will be sent out until the end of the shutdown. Filing online also helps to avoid any problems that may occur when the IRS resumes operations and has to process a huge number of mailed correspondences, which can be easily lost or misplaced.

Although no new levies and liens will be issued during the shutdown, taxpayers can still receive Levy or Lien notices that were generated before October 1, 2013.

IRS Criminal Investigation department continues to work to protect the government interest.

If you have a question about the received correspondence from the IRS, you are welcome to call us at 20/20 Tax Resolution, and we will be happy to help you to understand the problem. You don’t need to be our client to get a free consultation by calling our 1-800-880-7318 toll-free number.

A very creative approach to resolve tax issues has been taken by the State of New York. On August 5, 2013, Governor Cuomo announced a new state initiative regarding outstanding individual taxes. According to this new rule, the State of New York Department of Taxation can now request a suspension of New York driver licenses of those individuals who have unresolved State of New York tax issues that exceed $10,000.

This decision is just a follow-up of a law passed in 2013 as part of the Executive Budget. The State of New York hopes that the new plan will help collect an additional $26 million this year and increase state tax collection by $6 million per year after that.

The state has already started the process. About 16,000 notices have been sent to taxpayers, giving them 60 days to resolve their tax problems with the New York Department of Taxation. It does not necessarily mean that the liability has to be paid in full by this deadline. Setting up a payment plan for back taxes will be sufficient to avoid trouble.

If the problem is not taken care of within 60 days of the day when the suspension notice was issued, the taxpayer will receive a second letter, this time from the Department of Motor Vehicles, allowing an additional 15 days to take appropriate action. Failure to resolve the problem will result in the suspension of the taxpayer’s driver license.

It’s not news that the New York State Department of Taxation is not the most lenient tax collecting authority. It has very strict rules that have to be applied when the state collection officer makes a decision about repayment of the debt. To make things worse, New York state taxes do not expire in ten years as federal taxes do, which means taxpayers cannot really hope that their problem will take care of itself over time.

Among the most popular options to settle the debt with the New York Department of Taxation are an Installment Agreement (also known as a Payment Plan), and an Offer in Compromise. The first option allows the taxpayer to pay off the debt within a certain timeframe in equal monthly installments. The second is an agreement between the taxpayer and the New York State that allows the taxpayer to avoid full payment of the debt. Instead, the state agrees to compromise on a smaller amount, as long as this amount is the absolute maximum a taxpayer can pay without experiencing economic hardship. In both cases, a taxpayer has to stay compliant with all tax obligations from this point forward.

Compliance is one of the most important conditions that must be satisfied before any tax resolution options will be approved by the State of New York Department of Taxation. All missing returns have to be filed and processed before a taxpayer can enter into an Installment Agreement or get an Offer in Compromise accepted. This means that the 60 days that the State of New York gives its taxpayers is not at all excessive, especially considering that not every accountant is immediately available to start preparing returns as soon as he or she is contacted by a taxpayer. Waiting for the state to process filed returns may take even longer.

Even when all returns are filed and appear in the state computer system, negotiating the best resolution for the state back taxes is not the easiest work one can imagine. It requires knowledge of the state tax rules and regulations and experience in discussing tax issues with state tax enforcement officers. If you are in trouble with the state or federal taxes, call us for help today. At 20/20 Tax Resolution, we are not only happy to resolve your tax liability, but also provide free consultations for those who need it.

This August 20/20 Tax Resolution, a Broomfield, Colorado based tax resolution company, celebrates its 15 year anniversary. Founded in 1998, 20/20 Tax Resolution has devoted itself to providing exceptional, compassionate and comprehensive tax resolution services to businesses and individuals across the nation. Over the years, 20/20 has negotiated successful tax resolutions for over 15,000 clients, saving them untold millions and helping them to get back into compliance with state and federal tax agencies.

Since the company’s inception in 1998, 20/20 Tax Resolution has worked to become a leader in the difficult and confusing tax resolution industry. Brian Biffle, President and Founder of 20/20 Tax Resolution explained, “20/20 was founded to provide ethical and effective tax resolution services to businesses and individuals throughout the US. In an industry of noise, confusion and less than reputable representatives, we wanted to be a beacon of integrity and a leader in innovation.”

The company’s dedication to these principles is evident not only by their reputation within the industry, but also by the care and compassion they afford their clients. Rob Fineman, Vice President of Business Development, revealed one of his favorite memories from the last 15 years, “In helping out an elderly client with her tax issues, I found out that her husband was terminally ill. Helping her through not only her tax issues, but her husband’s health issues while seeing how 20/20 treated her with kindness and compassion helped me realize that I work at the best tax negotiation company in the country.”

Over the years, 20/20 has continued to hold true to these founding principles, which have set them apart from the competition. When asked to define what has elevated the company above their competitors, Richard Davidson, Vice President of Resolutions, answered, “Our commitment to excellence. It sounds like a cliché, but we hold all of our people to a higher standard than our competitors. We only promise what we can do and we always try and outperform our clients’ expectations. We are straightforward with our employees and let them know what’s going on. We try to treat people with respect and give them the tools to succeed.”

David Miles, one of 20/20’s Enrolled Agents and a 12 year veteran of the company added, “20/20’s success is the result of our employees. Our structure relies on strong, independent employees doing great work. Our management allows our employees to thrive on their own with their own style. It’s a remarkable thing in a company when two people can do a job very differently but because of equal success they’re both celebrated with equal regard.”

Looking ahead to the next 15 years, 20/20’s President, Brian Biffle said, “I don’t know what the next 15 years look like, but as far as the next five, I would say we will continue to improve everything we have created here and continue to be the leader in the industry for the foreseeable future, providing our clients great service, living a culture of success and enjoyment and giving the industry a company to emulate.”

If you filed an Offer in Compromise in an attempt to resolve your tax debt with the IRS, and your Offer has been denied, there is still something you can do to get it accepted. The IRS Offer in Compromise Unit is required to send you a letter explaining why your Offer was denied, and give you 30 days to file an appeal. It is very important not to miss this deadline; otherwise your Offer case will be closed completely.

To appeal your denied Offer in Compromise, you need to carefully review the IRS letter of explanations and complete form 13711, Request for Appeal of Offer in Compromise. This form has a specific section that you should use to explain your reasons for disagreement on each particular item. You can also draft a separate letter with all the facts that support your position, or any additional information that you would like to provide. Do not forget to include your name, address, SSN and contact phone number every time you write to the IRS. You will also need to enclose a copy of the IRS letter that denied your Offer in Compromise and any supporting documents that you have.

The IRS Office of Appeals is a separate IRS organization that allows its employees to provide their independent professional opinion about each case. Working with Appeals often saves taxpayers valuable time and money that they might otherwise spend going to the Tax Court. After your Appeal Request is received, you will be notified about the date when the Appeals Officer can discuss the case with you. You can meet in person, or discuss the problem over the phone. You can also chose to be represented by a tax professional, which is usually the best and fastest way to go through IRS Appeals. At 20/20 Tax Resolution we have extensive experience resolving cases with the IRS, including the IRS Office of Appeals.

It is essential to respond to all letters received from the IRS Office of Appeals in a timely manner. If you miss your scheduled Appeal hearing you might loose your right to appeal your Offer in Compromise denial. However, you can always be proactive and contact the Appeals Officer ahead of time to reschedule the hearing, if necessary.

It is also important to stay current and compliant with all your tax obligations. Although it is always a good idea to take care of your taxes, it becomes especially important when your case is being reviewed by the IRS, including Office of Appeals.

We live in a new age of information and the IRS is ramping up to take full advantage of big data to help with the collection of taxes and pursuit of tax cheats. Most of this information appears to be coming from online sources, such as Facebook, eBay, eCommerce, and credit card usage. However, the IRS has also made it clear that, in certain circumstances, it will also investigate personal emails.

The IRS will encounter problems trying to capture, integrate, and analyze this vast wealth of additional data. However, should the IRS overcome these obstacles, it should go a long way to helping them bridge the estimated $300 billion annual gap in lost tax revenue.

There has been very little discussion about the extra information that the IRS is now collecting. The typical taxpayer is generally unaware of the new data powers that the IRS is incorporating into its monitoring and enforcement processes. There has been little discussion and no public outcry on privacy issues.

It appears that, although the data is available to the IRS, and has been used in some circumstances, it is generally only being used in situations where irregularities have already been detected in returns. Furthermore, the IRS is taking great pains to ensure that the information is not specifically used to target particular groups of high-risk individuals. The IRS National Taxpayer Advocate has already demanded that the IRS provides details of exactly what data is being used, but the IRS has responded that such information could detract from its enforcement operations.

Many systems are already in place for the IRS to use this big data to track individual internet usage patterns that could identify potential tax evaders. Additionally, it is already believed that the systems are being used to analyze tax returns for specific patterns and flag them for real-time, electronic audits.

These measures will, of course, target primarily low and medium income individuals, households, and businesses. The high earning tax evaders will continue to operate their own tax dodges, which are difficult to detect and expensive to investigate.

Although it is designed to help taxpayers prepare individual Income Tax returns without spending too much time on collecting information and filling out the form, new legislation introduced by two Congressmen, Bill Foster and Mike Quigley, in April 2013 has already caused controversial debates over pros and cons of this development.

The Autofill Act of 2013 proposes an amendment to the 1986 IRS Code by introducing a computer program that will automatically generate an Individual Income Tax return for each taxpayer by using data received by the IRS from employers, financial institutions, and Social Security Administration. The idea behind it is to reduce the time burden for return preparation, to save taxpayer’s money spent on tax preparers and CPAs, and to increase accuracy. It was predicted that the Autofill Act of 2013 might save up to $2 billion a year paid in fees. Instead of reading through more than a hundred pages of instructions on how to complete an Income tax return, or paying a professional to prepare it for you, a taxpayer will be able to log into his personal page on the secure website and download a pre-prepared form.

This idea sounds like a good solution for many taxpayers who have difficulty filing their returns. However, the legislation clearly states that a taxpayer will have full responsibility “for the accuracy or completeness of his return of tax”. In other words, even if the IRS makes a mistake on the pre-prepared document, it will be still responsibility of a taxpayer to fix it.

Another concern that was already expressed about the Autofill Act of 2013 is a possible increase in identity theft that might occur if such a system exists. This program might become a target for various criminal groups that are already operating in many states.

The potential cost of creating and supporting a program like this once again speaks against the Autofill Act of 2013. The IRS will need to spend money paying not only for software development, but also to the IRS representatives whose responsibility will include correcting mistakes and helping taxpayers use the system.